More than half of Nigerian businesses remain unregistered, a new report by the FATE Institute has revealed, highlighting persistent informality and weak regulatory compliance among entrepreneurs across the country.
According to the 2025 State of Entrepreneurship in Nigeria Report, 54 percent of all businesses surveyed said they are not registered with any official body, even though digital registration platforms have made the process easier. The report, which covered 10,882 businesses across Nigeria’s 36 states and the Federal Capital Territory, shows that only 46 percent of entrepreneurs have formal registration, reflecting a modest improvement from 42 percent in 2024.
The report described the rise in informality as a major challenge to economic planning and access to finance. “Despite the slight recovery, informality remains deeply entrenched, especially among nano and micro businesses that dominate Nigeria’s enterprise landscape,” the FATE Institute noted. It said many small firms still avoid formal registration because of “limited access to information, mistrust in public systems, and the cost–benefit trade-off of registration.”
States with the highest concentration of unregistered businesses include Jigawa, Gombe, and Abia, where more than 85 percent of enterprises still operate informally. In Jigawa, the rate of unregistered businesses stands at 96.1 percent, followed by Gombe with 92.1 percent and Abia with 89.1 percent. Enugu and Imo also recorded high informality levels, at 87.9 percent and 88.6 percent respectively.
In contrast, states such as Kaduna, Borno, and Kogi reported the lowest levels of unregistered enterprises, demonstrating stronger engagement with formal business registration systems. The report noted that Kaduna’s low informality rate, about 10.3 percent, is linked to active collaboration between the state government and the Corporate Affairs Commission (CAC) to promote formalisation through mobile registration and small business support schemes.
The FATE Institute observed that formalisation has improved slightly in parts of the North-West and North-Central regions due to state-level initiatives. However, Lagos and Rivers recorded a rise in informality, with 69.8 percent and 75.2 percent of businesses remaining unregistered. Analysts believe this increase may be linked to higher operational costs and difficult economic conditions, which discourage small entrepreneurs from pursuing formal registration.
Among businesses that are registered, the Corporate Affairs Commission remains the most dominant registration body, accounting for 67 percent of formal businesses. The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) followed with 24.7 percent, while formal trade groups and associations accounted for 7.5 percent.
The report also linked higher registration rates to older firms, noting that “newly established enterprises remain the least likely to be registered.” About 68.2 percent of businesses less than one year old were unregistered in 2025, though this marks an improvement from 82 percent recorded the previous year.
The findings underline how Nigeria’s large informal sector continues to shape its economy, affecting taxation, access to credit, and accurate data collection for policy development.
